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Family business roundup: Profits squeezed at Wates, H&M and Auchan, Ferragamo and Hermes notch up strong results

Some of Europe’s best-known family businesses reported a mixed bag of results recently, with the luxury groups unsurprisingly notching up the highest growth.

Some of Europe’s best-known family businesses reported a mixed bag of results recently, with the luxury groups unsurprisingly notching up the highest growth.

Wates
UK-based construction Wates – set up by Edward Wates in 1897 and still fully owned by the Wates family – said revenues rose 7% year-on-year in 2012 to £1.2 billion (€1.4 billion), but added that pre-tax profit fell to £29.3 million from £32.9 million the previous year due to a tight squeeze on margins in UK construction.

Non-family chief executive Paul Drechsler said in a statement: "Reduced demand for construction, some unsustainable pricing by competitors and an increasing number of supply chain failures combined to create the most demanding trading conditions in 2012."

He continued: "Despite this, our turnover increased again to £1.2 billion, another year of growth."

Salvatore Ferragamo
On the back of continuing strong demand for luxury products, Italy-based luxury goods retailer Salvatore Ferragamo Group announced revenue growth of 17% to €1.2 billion in 2012. The Florence-based maker of top-end shoes and handbags recorded net profits of €125 million, up 21% from 2011.

The Asia-Pacific region was Ferragamo's biggest market –representing 36% of the total revenue figure. Europe was also strong, with 21% growth compared to 2011.

H&M
Swedish high street fashion chain Hennes & Mauritz said sales had risen 2% year-on-year to SEK28.4 billion (€3.4 billion) from SEK27.8 billion in its first quarter of 2013 – the beginning of December to the end of February.

In the same period last year H&M saw growth of 13.6%. H&M attributed the slow growth to adverse currency conditions due to the strengthening of the Swedish kroner, and also to the continuing cold weather.

Third-generation chief executive Karl-Johan Persson said in a statement: "The first quarter has been characterised by the continued challenging situation for the fashion retail industry."

Hermes
Meanwhile in Paris, fashion house Hermes announced revenue of €3.5 billion for 2012 – a 22.6% increase on 2011's figure of €2.8 billion.

The company, controlled by the descendents of founder Thierry Hermes, said sales in Asia – excluding Japan – were up 25%, while sales in Japan were up 7%. The company had 15% growth in Europe and 14% growth in the Americas.

Auchan
Elsewhere in France, retail group Auchan reported revenues were up 5.8% in 2012 to €46.9 billion from €44.4 billion in 2011. But operating profit was squeezed, falling 3.4% to €1.2 billion – caused by an increase in depreciation, amortisation and impairment expenses, according to Auchan.

Second-gen chairman Vianney Mulliez said in a statement: "Despite continued economic strife in Europe in 2012, the Auchan Group succeeded in recording good revenue growth."

He continued: "Given the prevailing environment, I believe these results are more than resilient, and can be qualified as a good performance."

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